Reverse Mortgages in Texas: Your Complete 2025 Guide

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• Tax-Free Cash Access: The funds you receive are considered loan advances, not income, making them tax-free (though consult with a tax advisor regarding your specific situation).

• No Monthly Mortgage Payments: Unlike traditional mortgages, reverse mortgages eliminate the need for monthly mortgage payments, improving cash flow during retirement.

• Stay in Your Home: You can access your home equity while continuing to live in your home, maintaining your community connections and lifestyle.

• Flexible Payment Options: Choose to receive funds as a lump sum, monthly payments, a line of credit, or a combination based on your financial needs.

• Growing Line of Credit: With a HECM line of credit option, your available credit can actually increase over time if unused, offering a valuable hedge against inflation and rising housing costs.

• Non-Recourse Loan Protection: Federal regulations ensure that you or your heirs will never owe more than the home is worth when the loan comes due.

• FHA Insurance: Federally-insured HECMs provide guarantees that you'll receive your promised loan funds even if your lender faces financial difficulties.

• Texas Homestead Protection: Texas's strong homestead laws provide additional protections that complement reverse mortgage regulations.This is a long form text area designed for your content that you can fill up with as many words as your heart desires. You can write articles, long mission statements, company policies, executive profiles, company awards/distinctions, office locations, shareholder reports, whitepapers, media mentions and other pieces of content that don’t fit into a shorter, more succinct space.

 A common concern about reverse mortgages is their impact on inheritance. However, reverse mortgages in Texas offer several important protections and benefits for heirs:

• Remaining Equity Preservation: Heirs inherit any remaining equity in the home after the reverse mortgage is repaid, potentially preserving a significant portion of the property's value.
• Multiple Repayment Options: When the last borrower passes away, heirs typically have 6-12 months to decide whether to keep the home by paying off the loan, sell the home to repay the loan, or turn the home over to the lender.
• Loan-to-Value Limits: Reverse mortgages generally allow borrowing only a percentage of the home's value (typically 40-60% depending on age and interest rates), ensuring some equity remains for heirs.
• Non-Recourse Protection: If the loan balance exceeds the home's value, heirs are not personally responsible for the difference – they can satisfy the debt by transferring the property to the lender.
• Option to Purchase at 95%: Heirs can purchase the home for 95% of its current appraised value or the loan balance, whichever is less, even if the market value has declined.
• Tax Benefits: The death of the borrower may reset the tax basis of the property, potentially reducing capital gains taxes if heirs sell the home.

"Our mother's reverse mortgage allowed her to stay in her Austin home where she'd lived for 40 years while providing financial security. When she passed, we still inherited significant equity despite the loan, and the lender worked with us through the whole process."

— Rodriguez Family, Austin

 How does Texas law affect reverse mortgages differently than other states?

Texas has strong homestead protection laws that provide additional safeguards for reverse mortgage borrowers. The Texas Constitution explicitly permits reverse mortgages but imposes special requirements including a mandatory 12-day cooling-off period, specific documentation requirements, and counseling provisions that exceed federal standards. Additionally, Texas restricts the use of reverse mortgages to single-purpose loans, home purchase loans, and federally-insured HECMs.

Can I lose my home with a reverse mortgage in Texas?

You can remain in your home with a reverse mortgage as long as you continue to meet your obligations to maintain the property, pay property taxes, keep homeowners insurance current, and use the home as your primary residence. Defaulting on these requirements could lead to loan acceleration and potentially foreclosure, though lenders typically work with borrowers to explore alternatives first.

How does a reverse mortgage affect Medicaid eligibility in Texas?

Reverse mortgage proceeds can affect Medicaid eligibility if not managed properly. While the loan itself doesn't count as income, proceeds held beyond the month received may count as assets for Medicaid qualification purposes. Texas residents considering a reverse mortgage who may need Medicaid should consult with an elder law attorney to structure their finances appropriately.

What happens to my reverse mortgage if I need to move into long-term care?

If you need to move into a nursing home or assisted living facility for more than 12 consecutive months, your reverse mortgage typically becomes due and payable. However, if there's a co-borrower who continues to live in the home, the loan remains active until that person also moves out or passes away.

Can my children be removed from my home after I pass away?

After the last borrower passes away, heirs (including children living in the home) have several options: pay off the reverse mortgage and keep the home, sell the home to satisfy the debt, or provide a deed-in-lieu of foreclosure. Lenders typically provide a reasonable timeframe (initially 30 days, but extensions are often available up to 12 months) for heirs to arrange financing or complete a sale.